14 September 2009

Zhao Ziyang on the "Birdcage Economic Model"

From Prisoner of the State: The Secret Journal of Premier Zhao Ziyang, trans. by Bao Pu and Renee Chiang (Simon & Shuster, 2009), Kindle Loc. 2442-56:
Comrade Hu Yaobang was similarly unenthusiastic about the planned economy. According to my observations, he believed it was the highly concentrated top-down planning model that had limited people’s motivation and creativity and restricted self-initiative at the enterprise and local levels. He believed that building a socialist society entailed allowing people, enterprises, and local governments to act independently, while the state continued to direct and mobilize them with social campaigns.

Chen Yun and Li Xiannian, however, emphasized the importance of a planned economy, especially Chen Yun, whose views had not changed since the 1950s. He included the phrase “planned economy as primary, market adjustments as auxiliary” in every speech he gave. The tone of his speeches didn’t change even after reforms were well under way. His view was that dealing with the economy was like raising birds: you cannot hold the birds too tightly, or else they will suffocate, but nor can you let them free, since they will fly away, so the best way is to raise them in a cage. This is the basic idea behind his well-known “Birdcage Economic Model.” He not only believed that China’s first Five-Year Plan was a success, but also, until the end of the 1980s, he believed that a planned economy had transformed the Soviet Union in a few decades from an underdeveloped nation into a powerful one, second only to the United States. He saw this as proof that economic planning could be successful. He believed that the reason China had not done well under a planned economy was mainly the disruption caused by Mao’s policies, compounded by the destructive Cultural Revolution. If things had proceeded as they had in the first Five-Year Plan, the results would have been very positive. In terms of foreign affairs, Chen Yun retained a deep-rooted admiration for the Soviet Union and a distrust of the United States. His outlook was very different from that of Deng Xiaoping, and there was friction between the two.

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